In a report late Wednesday, the agency said that president Mahmud Abbas received a call from Saudi Finance Minister Ibrahim al-Assaf who "informed him of a decision by King Abdullah... to transfer $100 million (75 million euros) to the budget of the state of Palestine."

Abbas thanked King Abdullah for the "generous gesture."

The decision comes "at a time when the state budget is suffering from a severe deficit due to the Israeli government's seizure of Palestinian funds as punishment for Palestine becoming a UN non-member observer state."

The decision came in response to the Palestinians' successful bid for upgraded UN membership, a move fiercely opposed by Israel and the United States.

In response, the Palestinians urged Arab nations to activate a "safety net" of $100 million a month to make up the shortfall.

But despite pledging to deliver the money, funds have yet to materialise, leaving the PA unable to pay its thousands of government employees, who are still owed half their salaries from November and all their salaries from December.